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Please begin with an informative title:

Here's what Duke Energy's Director of Environmental and Legislative Affairs had to say about who's going to pay the costs of cleaning up the Dan River after one of the company's retention ponds collapsed, spilling more than 100,000 gallons of coal ash into the Dan River:

[W]hen costs do come into play, when we've had a chance to determine what those costs are, it's usually our customers who pay our costs of operation.
Arsenic And Other Toxins Leaking Into Dan River From North Carolina Coal Ash Dump

Because Duke Energy is a utility, it can collude with the N.C. Utilities Commission to simply raise the cost of electricity for its customers rather than reduce the company's overall profitability. And, I'm sure the Commission will oblige. Its members are appointed by Gov. Pat McCrory, who worked for Duke Energy for more than 28 years.

What Do Corporate Polluters Have In Common With Bankers?

They almost never wind up prison. Despite strong environmental statutes that make corporations criminally liable for knowingly violating state or federal regulations, the EPA and state AGs are often reluctant to criminally charge individual corporate officers for violations if someone hasn't died or is in danger of dying.

In fact, EPA internal guidance (developed in conjunction with DOJ) makes their priorities very clear. High priority criminal investigations are those that involve a clear threat to human life and a clear violation of environmental law. That sounds fine, until you realize that the agency doesn't have the resources to pursue criminal investigations for other types of violations.

This creates an odd result. Duke Energy, BP, and other major recurring offenders of the Clean Air and Clean Water Acts are less likely to be charged criminally despite long histories of negligence than your local landowner that fails to inform an independent contractor of asbestos. Both violators should be pursued, but one violator is engaging in environmental destruction on a different scale, and should be treated that way.

In the words of Jay Rockefeller, “Industry does everything they can and gets away with it almost all the time, whether it’s the coal industry ... or water or whatever. They will cut corners, and they will get away with it.” We are chin-deep in a second great gilded age of American business. If we don't do something soon, our democracy will drown. Which is why we need to start tying together the disparate strings of our discontent into a clear message and a common goal.

We need to recognize that when a big bank willfully ignores the law by bundling subprime mortgages into a security and claims that it is low-risk despite knowing otherwise, it's engaging in the same type of activity as a polluter like Freedom Industries who neglects to repair an aging chemical storage tank. We need to constantly reveal how industry-wide practices subvert the law. But most importantly, we need to weaken corporate power by changing the law.

Intro

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Polluting is a Cost of Doing Business

Without the threat of criminal sanctions, large corporations are happy to pay the fines and fake compliance. This is most evident in places like Appalachian coal country, where local regulators are often closely aligned with business interests. But it holds equally true in almost every part of the United States. In a presentation by a prominent corporate environmental attorney, he actually expressed nostalgia for the "good ole days" when companies would pay his firm to help them comply with the law. He said the attitude he sees nowadays is that most companies assume they'll never see an enforcement action, so why worry about something that's unlikely to happen?

For example, Waterkeeper Alliance and several local Kentucky organizations filed suit against three coal companies for allegedly falsifying more than five years of federally mandated reports designed to ensure their compliance with the Clean Water Act. Some of the submitted reports were actually photocopied, with only the date crossed off and a new one handwritten in the margins. And, of course, they showed that the company's coal mining retention ponds weren't discharging heavy metals into Kentucky Rivers.

Filing knowingly false reports to the EPA or the state is a criminal violation of the Clean Water Act. Filing FIVE YEARS of false reports is a substantial criminal violation worthy of not just fines, but jail time. But, the company knows its not going to be investigated criminally because no one immediately died from filing a false report. Unfortunately, some one could have died, we would just never know it. The reports are one of the only ways that EPA and the state can be sure that the company is following the law.

Piercing the Corporate Veil

If compliance can be ignored as "the cost of doing business," what can we do to hold corporations accountable? In my opinion, the only option we have left is to attack, head-on, the corporate structure. Corporations are protected by what's called, in legalese, the "corporate veil." This means that shareholders of a company can't be held liable for a company's actions unless a court determines that the company's structure was created, in essence, only to avoid liability (it's actually a complicated test, but in most cases the "veil is pierced" by the court when the structure appears designed specifically to protect an individual from wrongful conduct).

In Delaware, where most corporations are headquartered, piercing the corporate veil is common law, meaning judge-made. Many judges are extremely reluctant to hold shareholders accountable for corporate actions unless the facts overwhelmingly show abuse of the corporate structure. Since companies like BP or Duke involve thousands of shareholders, and the structure is clearly designed to facilitate raising capital rather than engaging in wrongful conduct, no judge would ever rule that the corporate structure should be pierced if the company was found criminally negligent for polluting, for instance, hundreds of square miles of the Gulf of Mexico.

But, common law can be changed. State statutes modify or override the common law, and that's where corporations are vulnerable. Imagine a state statute that says:

Shareholders of a corporation doing business in the State can be held personally liable for the actions of a corporation that is found to be systematically violating state law.
Would you invest in such a company? Would anyone maintain ownership stake in a company facing that kind of threat? No, obviously, and so the statute creates an effective death penalty for corporations. No corporation could continue its existence if its shareholders could be found personally liable for corporate actions. Even the mere hint that a state's AG could be considering filing such a charge would cut off the company from raising capital.

But Is That Even A Good Thing?

I can imagine two main objections:

1) Its Too Extreme.

You're right. We shouldn't have to resort to such lengths to force corporate compliance with our laws. The regulators paid by us to enforce laws duly passed by Congress or our state legislators should be forcing compliance. But they're not. Corporations have rolled over our regulators like a truck over a small pebble on the highway. We need an extreme option to force action, otherwise regulators will take the easy path of small slaps on the wrist and the occasional big settlement when the media pays attention.

2) AGs would be too afraid to use the power.

I won't disagree. Our current milquetoast AGs are too cowardly to confront corporate America. But that's why we can't stop organizing and supporting candidates who do have the courage. No idea will work unless we start getting better Democrats. We could even suggest a petition process, whereby initiating the corporate death penalty could take place through a citizen suit similar to what's available in some environmental statutes.

This Is Not Hyperbole

"We" have lost control of this country. Almost all areas of "public" policy have become vectors for corporate profits. I haven't seen a piece of legislation written in the last two decades that didn't contain loopholes for some major corporation. For those companies unlucky enough to be regulated by laws passed before the complete corporate domination that occurred in the 1990s, there's always lawsuits and regulatory lobbying.

Although my primary interest is in environmental issues, I'm no longer blind to the underlying problem. Corporate influence has so saturated our society that we can't even disentangle public interest from corporate interest. Our academic journals are publishing peer-reviewed corporate propaganda produced by academics paid by corporations. It's gotten to the point where even if an agency could "review the scientific literature" to determine whether something is harmful, it couldn't reach an unbiased result because a significant percentage of the journal articles being published are essentially corporate sponsored.

This country won't address global warming until it attacks corporate power. That much should be obvious to any observer of politics over the last six or seven years. Even as the scientific community has grown more convinced that catastrophic consequences will occur if we do nothing to cut GHG emissions, the public discourse is increasingly dominated by oil industry shills and corporate mouthpieces. Flat out lies are now being routinely published by major media outlets. Even though the evidence of catastrophic warming is so obvious, the influence of corporate denialism is so strong that CBS can run a story on unprecedented ice storms in the South, unprecedented droughts in California, unprecedented heat waves in Australia, and unprecedented rain and flooding in England in the same broadcast but not mention climate change.

We need to start attacking corporations. If corporations are people, then corporate shareholders need to fear personal liability.

Extended (Optional)

Originally posted to acommonconcernofhumankind on Wed Feb 19, 2014 at 11:13 AM PST.

Also republished by Community Spotlight and Community Rights Movement.

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